Session 2 - Clearing the Hurdles

Clearing the Hurdles: key issues affecting Caribbean private sector competitiveness Dr. Sylvia Dohnert Caribbean Exporters Colloquium November 2014

The Productivity Challenge

What’s happening in the Caribbean?

Lower Real GDP Growth

Real GDP per capita relative to ROSE 140

Forecast

120 Good

100

80 60

40

Caribbean-C Caribbean-T

20

C6 OECS

0

1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Bad

• In the early seventies real GDP per capita was four times higher than rest of small economies (ROSE). Today it is less, i.e. 0.9, and forecasted to fall further.

(Ruprah and Sierra 2014)

The Productivity Challenge

What’s happening in the Caribbean?

Lower Total Factor Productivity Growth

1.1

Underlying the relative decline is the relatively worse performance of total factor productivity.

Ruprah and Sierra 2014

1

0.9

Ratio

0.8 0.7

0.6 0.5 0.4

ROSE Caribbean-T

Caribbean-C C6

The Productivity Challenge

Small states, small economies

CARIFORUM

without DR/HA

Average GNI/capita (US$)

4,713

9,108

Average population ('000s)

1,847

538

8,7

4,9

Average economy size (US$ billion)

The Productivity Challenge Low innovation and entrepreneurship Countries underperforming relative to GDP in innovation outputs and creative outputs - ISO 9001 certificates - High tech exports - New business density - S&T publications - ICTs and new business & orgs models - Creative goods and services

The Productivity Challenge Private sector firms in the Caribbean vs. ROSE: - smaller, older, less involved in trade, more difficulty in accessing finance 18% 16% 14%

12% 10% 8% 6% 4%

2% 0%

Exporters

Importers Caribbean

ROSE

Firms involved in trade

Two-way traders

The Productivity Challenge Private sector firms in the Caribbean vs. ROSE: - smaller, older, less involved in trade, more difficulty in accessing finance 50.0% 40.0%

Caribbean

18%

ROSE

16% 14%

30.0%

12% 10%

20.0%

8% 6%

10.0%

4%

2% 0.0% Small firms

Medium-sized firms

Large firms

Firms citing access to finance as major obstacle in business

0%

Exporters

Importers Caribbean

ROSE

Firms involved in trade

Two-way traders

The Productivity Challenge Difficult macro, business climate 8 200 180 160 140 120 100 80 60 40 20 0

8

3

5

7

9

1

5

7

3 AB BH BB BL DO DR GR GU HA JA SKN SL

Source: WB DB 2015

The Productivity Challenge Labor markets not providing required skills

The Productivity Challenge Hausmann: Knowledge acquisition and scrabble

How many words can you make if you add an “R”?

The Productivity Challenge 1. Focus on “nearby� sectors Sports- Tourism and preservation in the Rupununi

The Productivity Challenge 1. Focus on “nearby� sectors Environmental certifications helping tap niche markets

The Productivity Challenge 1. Focus on “nearby” sectors Fruit juice into neutraceuticals

The Productivity Challenge 2. Partnerships to access specific skills/assets

The Productivity Challenge 2. Partnerships to access specific skills/assets

The Productivity Challenge 3. Inter-firm cooperation to achieve scales, enhance knowledge

The Productivity Challenge 3. Inter-firm cooperation to achieve scales, enhance knowledge

The Productivity Challenge 4. Technology to disrupt business models Narayana clinic in Cayman Islands

2000 beds USD 1400/surgery Flat rates Changing how healthcare works!

The Productivity Challenge A last thought‌ Brain circulation

Thank you and visit our revamped website…. www.competecaribbean.org In partnership with:

11/11/2014

‘Hythe’, Welches, Maxwell Main Road Christ Church, Barbados BB17068 Tel: 1. 246. 627. 8536 • Fax: 1 .246. 629. 8869 Email: competecaribbean@iadb.org www.competecaribbean.org

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